2014 (12) TMI 1270 - HC - Customs

Betel nuts - seizure - whether the goods are indigenous or imported? - whether the goods can be released when the matter has not attained finality? - Held that - After seizure u/s 110 of the said Act, the goods may be released to the owner, pending adjudication, upon taking a bond from him or her in a proper form - It would be better for the respondent authorities to take security from the writ petitioner in accordance with the regulations, read with the said circular - Department will be free to determine the security to be furnished by the petitioner to cover duty redemption fine etc., but the same should not exceed 25% of the value of the goods - application disposed off - decided partly in favor of applicant.

Summary

Issues: Seizure of betel nuts under Customs Act 1962, dispute over imported or indigenous goods, release of seized goods subject to conditions, liability to pay duty not established.

Analysis:
1. Seizure of Betel Nuts: A significant quantity of betel nuts, 98.599 MT, was seized from the petitioner by customs authorities under Section 110(1) of the Customs Act 1962. The authorities allege that these goods were illegally imported into India, while the petitioner contends that the goods are indigenous and not imported.

2. Release of Seized Goods: The writ petitioner challenged the decision of the Commissioner of Customs regarding the release of the seized betel nuts. The decision required the petitioner to fulfill certain conditions for the provisional release of the goods, including payment of duty, execution of a bond, and furnishing a bank guarantee. The petitioner objected to the demand for duty payment at this stage.

3. Legal Position: The court clarified the legal position regarding the release of seized goods pending adjudication. It was stated that goods may be released to the owner upon taking a bond and providing security, as deemed appropriate by the authorities. The court referred to specific regulations and circulars indicating that goods may be released upon securing 25% of their value as security.

4. Liability and Duty Payment: The court emphasized that the liability to pay duty and the actual duty payable were not established at the current stage due to the ongoing dispute over the nature of the goods. Therefore, the court directed the authorities to determine the security to be furnished by the petitioner, not exceeding 25% of the goods' value, in accordance with regulations and circulars.

5. Court's Decision: The court disposed of the writ application by instructing the respondent authorities to determine the security to be provided by the petitioner by a specified date. Upon the petitioner furnishing a bank guarantee and required bond, the authorities were directed to release the goods within three working days. The court highlighted that the entire amount could be secured by a bank guarantee and that the petitioner must comply with the order and regulations.

6. Conclusion: The judgment focused on clarifying the procedures for the release of seized goods under the Customs Act, ensuring that the petitioner's liability and duty payment were determined fairly based on the outcome of the dispute. The court's decision aimed to balance the interests of both parties by providing clear instructions for the release of the betel nuts while safeguarding the revenue interests of the customs authorities.